The Herald Bulletin

August 19, 2013

Stocks edge higher, led by technology


The Associated Press

NEW YORK —  U.S. stocks edged higher in early trading early Monday, led by technology companies, but many investors continued to focus on the quick rise in bond yields.

The Dow Jones industrial average was up 21 points, or 0.1 percent, to 15,102. The Standard & Poor's 500 index rose 3 points, or 0.2 percent, to 1659. The technology-focused Nasdaq composite index rose 17 points, or 0.5 percent, to 3,651.

Intel led the Dow higher after the stock was upgraded by the investment bank PiperJaffray, which raised its rating on the chipmaker, predicting strong sales for Intel's chips for tablet computers and mobile devices. Intel rose 70 cents, or 3 percent, to $22.63.

Other major tech stocks also rose. Apple rose $8.43, or 1.7 percent, to $510.92 and Google rose $13.84, or 1.6 percent, to $870.60.

The main focus for many investors was the rapid rise in bond yields. The yield on the benchmark U.S. 10-year Treasury note rose to 2.86 percent from 2.83 percent Friday. A week ago it was 2.62 percent.

The quick rise in bond yields has worried some investors because it leads to higher interest rates and borrowing costs for many kinds of loans, including home mortgages and corporate loans.

Some investors expect the 10-year note could rise above the psychologically important 3 percent mark as early as month's end.

"I do think we're not too far away from that point in time where this heavy increase in bond yields is going to start impacting the (stock) markets," said Doug Peebles, chief investment officer of AllianceBernstein Fixed Income.

The Dow is coming off its worst week this year. The benchmark index fell 2.2 percent last week and the S&P 500 lost 2.1 percent. Investors have been focused on the possibility that the Federal Reserve may pare back its massive bond-buying program as early as next month.

On Wednesday the Federal Reserve will publish the minutes of its July policy meeting, and on Thursday the Fed starts its annual conference in Jackson Hole, Wyo.

A rout for retailers continued Monday. Saks, the luxury retailer, reported a wider loss two weeks after agreeing to be bought by the Canadian retailer Hudson's Bay, the parent company of Lord & Taylor, for $2.4 billion.

The retail sector got off to a dismal start last week after Wal-Mart, Macy's and Nordstrom each cut their sales outlooks for the year. This week, J.C. Penney, Target, the Gap, Home Depot, Sears and others report quarterly earnings. The retail industry is often closely watched by investors because consumer spending makes up a large chunk of the U.S. economy.

In other news, Zillow said it was buying New York-focused real estate website StreetEasy for $50 million. Zillow dropped $4.57, or 5 percent, to $87.03.